Background:

I have undertaken this report to explore, learn and analyse the local online search and directories market to understand the developments that are taking place in this area. There are more than 18 players, from small and medium enterprises (SMEs) to large corporations trying to get some share of this market.

The main focus of this report is on Sensis and its competitors and how it can reinvent itself in a rapidly changing local market.

Introduction:

Australia’s online search and directories market is rapidly growing and to this date there are 18 players in this market segment, worth $235 million as reported last year (2007). It is expected to reach to $532 million by 2010. Sensis, (owned by Telstra) is a dominant player in directories market and Google in search.

The online search market only represents a portion of the much larger local online advertising market. The local online advertising market is growing steadily and will reach the predicted $1.4 billion for the full calendar year 2008. It is forecasted to be worth AU$1.8 billion by end-2011, growing at a compounded annual growth rate (CAGR) of 29 per cent (2007-2011).

Online advertising can be classified into four areas, those being:

Search

Directories

Classified

General Display

In terms of local market share, the percentage breakdown of various players in each category is shown below.Note: This data is collected from BRW article published in 2007, requires online subscription, Details: Foad Fadaghi, “Australia Online,” Australian Financial Review, Feb 22, 2007. [Online]. Available: http://www.afr.com.au. [Accessed: April. 02, 2008]

Search:

Directories:

Display:

Classifieds:

Top 10 Industries advertising onlineNow let's look at the top 10 industries spending money on online advertising. Following are the leaders in descending order:

Finance

Computers & Communications

Motor Vehicles

Travel/Accommodation

Entertainment & Leisure

Media

Fast Moving Consumer Goods (FMCG)

Real Estate

Retail

Government

Note: This data for top 10 categories is collected from the report published by PricewaterhouseCoopers (PwC) and is available at the Interactive Advertising Bureau Australia website and the recent one is here.

Local Online Search & Directory Listing

The Local online search and directory listing area is becoming fiercely competitive, whereby there are 18 players (probably more) eyeing a market worth $254 million, tipped to reach to $532 million by 2010.Following are the 18 players listed below:

7. Local Search SolutionsWebsite: www.localsearchsolutions.com.auWho's behind it: LSS is a privately funded company, (True Local formerly known as Australian Local Search was created by LSS before it was sold to News Limited)Launched: 2005Based in: SydneyService: LSS provides venture incubation and acceleration services and focuses on the internet search and interactive media sectors.No of business listed: N/ATop 3 industry wide categories:Revenue Model: N/AMobile Version : N/ATechnology Stack :N/AOnline Map Integration: N/A

11. Rave About ItWebsite: www.raveaboutit.com.auWho's behind it: Mark Rimmer and Tim GriffinLaunched: November 2006Based in: SydneyService: provide an enjoyable way in which users can search, rate and discuss what they think of services in their local area and beyond. It is like word of mouth, but online, as this is the most accurate representation of how well a business services their customers.No of business listed/reviewed: N/ATop 3 industry wide categories: Hair and Beauty Salon industryRevenue Model: Contextual advertising (Google AdSense) and display (banner) advertisingMobile Version: NoTechnology Stack: LAMPOnline Map Integration: Google Maps

15. WomowWebsite: www.womow.com.auWho's behind it: Fiona Adler and Brad BondLaunched: July 2007Based in: MelbourneService: is an online business directory of word-of-mouth recommendations to help people find the best local businesses. All businesses are entered and rated by users who describe their experience, including what they particularly liked or didn’t like about the business.No of business listed: 6500Top 3 industry wide categories: Restaurants, Cafes & Bars,Shopping & hobbies,Health & MedicalRevenue: Optimised and Premium Listing.Mobile Version: NoTechnology Stack: LAMPOnline Map Integration: Google Maps

After analysing all the players in local online search market, these are the top 5 players in this market according to their market share/business listings.

1. Yellow, MyLocal (NineMsn)

2. dLook

3. TrueLocal,Google Maps, Yahoo7!

4. AussieWeb Local Search

5. HotFrog

Sensis Under the Hood

Let's first analyse what Sensis is all about.Sensis' is fully owned by Telstra. It has various services/products under its umbrella and most of them are in the online and print directory listing and advertising business areas.Sensis' portfolio will be discussed in detail a little bit later; let's first look at where Sensis stands in marketplace in terms of branding and market segments.

Telstra – Parent Company

Sensis' parent company is Telstra, an Australian tier-1, fully-integrated telecommunications (telecom) and media company, provides services to customers (in cities and country area). As far as the telecom industry is concerned, it is the dominant player in Australia and will remain so in any foreseeable future. Telstra also has a 50% stake in Foxtel, which is a (pay TV) media company.

Telstra vs Google

Telstra with Sensis under its belt and a majority (50%) ownership in Foxtel, is considered the same as Google of Australia or a media company, at least in some quarters. Bruce Akhurst, CEO of Sensis explains during his speech, on March 30, 2007 how he sees the future of Sensis and Yellow. Read it here.

Google started as an online search company and expanded into advertising. Following this, they expanded into online maps, instant messenger (Gtalk), blogging platform (Blogger) and social networking (Orkut). Last year, they rolled out Android platform for mobile handsets under a 34 company consortium known as the Open Handset Alliance. In addition, Google began providing an online suite of applications and recently, a web services offering like Amazon with its recently launched Google App engine. Beginning as a search company it has quickly expanded into various sectors in a short period of time.

Eric Schmidt, CEO of Google, has said that it's not a media company but a technology company. Pundits have disputed this claim across the globe, read about it here.

Well for the time being, Google is still regarded as an engineering company as they are innovating new solutions by using technology.

Telstra, although being a telco company is still regarded as an engineering company. Paul Budde correctly pointed this out in my recent interview with him. Read it here.

As far as engineering is concerned, Telstra's emphasis is on hardware-oriented, network ownership-centric service creation, Google's is on software-services-powered engineering (though they've done some great server farm work to support this).

Considering the Sensis and Foxtel (50% holding) subsidiaries, does Telstra appear to be media company? Sensis is a major player in online local directory search and advertising space, however it doesn’t produce any content on its own for consumers yet, so they can’t be positioned as a media company. CitySearch is an exception to this. Foxtel (pay TV), being a media house doesn’t have any bearing on Telstra's and Sensis branding and market positioning. So neither Telstra/Sensis nor Google is a media house, given that both have a foundation in engineering and are in the online search and advertising space.

Google is a global player in this space, where as Sensis is a dominant local player. One exception to this is that Sensis has 50% stake in SouFun in China.

Sensis is now finding out that not only are Google trying to capture its market in the online local search space, but there are 17 more players competing in this market too.

Let's now analyse in more detail what Sensis' various services are and how they are performing.

Sensis Services - Under The Scanner It's time to see how Sensis services and their offerings stand out when analysed under the scanner. Only major services like Yellow Pages, Whitepages, Trading post, Whereis, Mobile, City Search and Media Smart were anlaysed. The rest of them don’t have much bearing on Sensis numbers and brand except SouFun (which is targeted for Chinese market and has no bearing on local market)

To analyse the service offerings the following aspects were considered. These are:

Originality

Simplicity

Performance

Marketability

Revenue Model

Technology

Originality

Sensis' main page, which is their face to the outer world, is a collection of all the services. Not much in it in terms of originality - probably inspired from Google and Yahoo and enhanced further - especially the top/upper tool bar on the main page. The top/upper tool bar displays icons and names of services, where as if we compare it with Google's top/upper tool bar it displays name only.

The middle and main sections of the page are branded as being the “The Search Engine for Australians”. It has the major service offerings listed in a tabbed fashion, with the first one being: All (sites) followed by Websites, News, Images, and 3 major services respectively. There is nothing original about that as well either.

In addition to this main page, each of the services has their own dedicated portal. Yellow and White Pages are available locally in countries worldwide, similarly we have got them here. Trading post is similar to ebay, Whereis is like Google Maps but now contains more information via mashups, Linkme is more of a Seek (Australia) + Linkedin and Media Smart is like Google Adwords/Adsense.

To say the least, there is not much originality in these services, which are offered locally across the globe under different names and brands. Having said that all these services have their local niche market and Sensis is playing in that market. The only question here is whether they are doing it in an innovative way or just following the trend. Well, the answer to this is that they are following the trend and catching up, so we can’t expect originality.

Simplicity

As far as simplicity is concerned all the individual portals are easy to use and find relevant information.

Yellow - has the simplest interface and is the least cluttered of all their services, especially their homeatyellow which is the simplest site of all the sites under their umbrella.

White Pages - has more choices so it's a little bit cluttered, but it is simple enough.

Trading Post is more cluttered as well and trying to do too many things/giving too much information on the page.

CitySearch is better, looks less cluttered, better structured and it’s easy to navigate.

Whereis – Is a very useful site and with a simple interface, though the main page design needs a revamp and a more appealing interface. Some non-IE browsers like Firefox render it a bit differently. The new site looks better, but too cluttered at the bottom of the page.

On the main Sensis page the top/upper toolbar is similar to Google’s top/upper toolbar and has icons and links to Yellow, Whitepages, Trading Post, Whereis, CitySearch, Go stay, Jobs, Just Listed, More Sites and Big Pond. When clicked on more sites, got a new popup frame via AJAX and that blocked the main search bar at the center of the page. In addition to that same sites that are available on top/upper bar are duplicated and few more new sites like SouFun and Mobile in the popup frame, thus wasting space.

Structuring of content on the main Sensis page needs a big overhaul. One of the things to consider keeping the same theme across all the sites. There is no need to have icons and name together on top/upper bar as it just clutters the space, (see how the iPhone menu does it). A lot more can be done in this area.

In general all of the major sites (except homeatyellow) have too much information on the site, which leads to a pretty bad user experience. This picture summarises well what simplicity means.(Note: Image is used from Technology and Geek Stuff)

One common issue found across all the sites was their poor support for non-IE browsers and non-Windows platform. Rendering in Firefox, which has 25% browser market share and is growing and Safari (Macintosh and is growing), is poor. Example the AFL site that is controlled by Sensis, doesn’t render the content in desired format on non-IE browsers and non-Windows platform in comparison to what is achieved on IE. Not only that but the bandwidth usage is bad for non-IE browsers and non-Windows platform.

In comparison to this, Fairfax's - Real Footy and Herald Sun’s - Superfooty renders content far better on Firefox and non-Windows platform. It will be a good exercise to make some changes when it comes to interoperability between browsers and platforms.

Performance (Quality of Results)

More and more people are using Google for search whether it is news, general information, forums, images or maps. The reason they are doing this is because not only can they find things more easily and rapidly, but the results are also more relevant to the search criteria. Sensis search is not only slow (can’t compete with Google infrastructure) but it can’t even find relevant information and doesn’t have in-depth indexing for all the sites. Therefore the quality of results on its search is poor.

As far as the local business directory search is concerned via White Pages and Yellow, it is fine. Relevant information is retrieved/found. So credit should be given to the team.

Search results on Whereis are quite good, especially the value they offer compared to Google. On a newly launched Whereis site, when searching for a specific location, it not only finds the relevant location, but gives information on nearby Hotels, ANZ ATMs, nearby secure parking locations, rental properties and others useful information. This is a great mash up service and is a winner in this space. Even though response time via Ajax might be bit slow or because of network congestion, but once high powered broadband is available these latencies will be less.

Marketability

The creation of Sensis in 2004 was Telstra's strategy to become a major media player, focusing on advertising. It was also an attempt to defend and extend Sensis' existing advertising base against increasing competition from internet search-engine heavyweights, in particular Google.Roy Morgan conducted a survey from Jan – Dec 2006 and found that 13 million Australians accessed Sensis' services over 130 million times per month, suggesting a very high level of brand recognition in the Australian marketplace.

The following quote sums up the public awareness of Sensis“...every household uses its products but to most people the company itself is a mystery...”

Whilst Sensis' individual web products have enjoyed a high level of brand recognition, Sensis as a brand has not. Sensis was previously known as 'Pacific Access', a brand that was relaunched multiple times over several years.

This is despite a $10 million rebranding campaign in 2004 with the intention that :"By this time next year (2005), there will not be too many Australians who don't know who we are,"

One of the reasons that Google has been so successful is its branding. In fact, in 2006, Google beat Starbucks, Apple Computer, and Coca Cola to claim BrandChannel.com’s Brand Of The Year title.

Suggestion:Sensis has struggled with branding. As mentioned above, Sensis manages 14 services, with each product having it's own identity and marketing budget. Sensis could better organise their services into 'sub-umbrellas' by grouping them based on what each of the products or services do. E.g. Sensis (Home) Sensis (Work) Sensis (Entertainment & Travel)

Sensis (Home) could have White Pages, Just Listed etc.

So perhaps there could be 3 or 4 sub umbrella categories containing between 3 and 4 individual products. This means that Sensis would market sub-umbrella brands rather than individual brands. The theme is what they would market (e.g. around home) rather than attempting to push the entire brand set at the same time to a mass audience.In addition to this, Sensis could spend less time marketing the technology of their actual producs and instead promote the benefits of the products. For example, Yellow Pages is offered as having 'Map based search'- what is the benefit in this? The user would be more interested in knowing that their search feature could save them time on travelling, or reduce petrol spend etc.Alternatively, Sensis could group their products by target market, which they would know a significant amount through their demographic analysis.

Sensis grew its sales revenue by 7.8% to $954 million with the Yellow™ and White directories and emerging businesses delivering strong results.

Total Sensisrevenue growth of 7.8% to $954 million;

Core business (not including SouFun) revenue growth of 5.8%

includes 4.8% growth in Sensis’ directories business compared to 2.8% in 1H07;

Total Yellow™ growth of 3.2% ($543 m) compared to 1.5% in 1H07

includes 0.2% growth in print compared to a 2.5% decline in 1H07

includes 21.8% growth for yellow.com.au;

Total White Pages® growth of 10.3% ($161)compared 8.1% in 1H07

includes 9.9% growth in print compared to 8.1% growth in 1H07

includes 45.6% growth for whitepages.com.au;

Total classifieds revenue stabilised at 13.8% decline compared to 15% decline in 2H07.

includes strong usage growth of 18% for tradingpost.com.au over the December 07 quarter.

Continued growth in emerging businesses of 27%. Highlights include:

Over 60% revenue growth in the Whereis® location and navigation business

55.6% revenue growth in the MediaSmart® digital advertising business

Exceptional revenue growth of 18.2% in voice services

Strong growth in SouFun revenue of 79.2%.

Technology

One of the things that Sensis have got it right is their technology stack. Their software stack for majors services is based on JEE(J2EE) which is the obvious choice for such a massive IT reliant organisation. I’m glad that they have made the right choice. Not only that, my understanding is, that unlike their parent company Telstra, they are using Agile methodology for their software development life cycle (SDLC), which is a another tick and credit should go to them. They are also using .NET (stack for Trading Post), some offerings from LAMP stack(like PHP) and some of the new services in use/coming will be using Ruby on Rails (ROR) which is an emerging stack in enterprise space.As far as using ROR is concerned, it's too early to say about its success in a massive transaction oriented system, but when Thougtworks is working on your floor, they will adopt Ruby on Rails(ROR) in some areas. Having said that Ruby on Rails is a smart and appropriate choice. It allows a business to be agile in the marketplace and manage change priorities. Ruby on Rails (ROR) compared to using JEE (J2EE) stack with agile practices (like SCRUM/XP) can give far more agility when it comes to delivery of a service/product. It is a competing technology with .NET stack and JEE (J2EE) stack.

Another good aspect as far as technology is concerned is, they are moving to Service Oriented Architecture (SOA). Sensis has currently undertaken a massive consolidation and transformation project, as suggested by Sol Trujillo (CEO, Telstra) last year and implementation of SOA is part of this, which is another right step in right direction.

This is a step in right direction because SOA is a business vision and is best suited for Finance/Banking and Online/Media industry. If this is implemented and realised then, Sensis as an organisation will not only become more agile to market needs, but will increase its working efficiency (more margins), will streamline the applications (removes redundant applications, less support work) and bring visibility across the business.

It’s a difficult and a daunting task to achieve, especially when there is a heterogeneous environment. Integrating different stacks can be daunting, even though most of the stacks claim they are interoperable. My experience and wisdom tells me it works fine in a homogeneous environment, but in a diverse environment it's challenging to achieve. One of the focus point of SOA is to make this task easier by adopting and following standards.

Sensis & Competition

Business Listing Data

Currently Sensis maintains arguably the largest number of business listings (1.7 million) in Australia through its directories, Yellow Pages and White Pages. Telstra sources its business listings from its own customers as well as other Carriage Service Providers (CSPs) such as Optus etc.

Earlier this year, the Australian Communications and Media Authority (ACMA) allowed Australian Local Directories Pty Ltd to access a subset of the Integrated Public Number Database (IPND) data in order to produce a sample public number directory for ACMA's assessment of an application for final authorisation.

Once granted, Australian Local Directories Pty Ltd (producers of Coffs Harbour Local Directories and Port Macquarie Local Directories) will be allowed to publish public number directories using IPND data. Read it here

Ibegin Source

Ibegin is a business data provider company in the US that is aiming to make business data in US and Canada more accessible to the public, including local search websites. Ibegin has expressed an interest in providing a similar source of business data for the Australian public (date TBA). The addition of a data provider like Ibegin source would encourage more developers of local mashups and thus a greater level of innovation in the local search industry.

Mapping data

In 2007, When TomTom, the Dutch In-car GPS maker, launched their products in the New Zealand market; chose to use mapping data from a local software provider, Geosmart, in place of Sensis' NZ product, Whereis TM (despite the fact that they use Sensis data in Australia).

What made this development so significant is that TomTom own a reported 39% of the Australian In-car GPS market, which represents a significant royalty income for Sensis, when you consider that since 2005, every TomTom device sold in Australia had Sensis' WhereIs maps pre-loaded on to it.

When TomTom launched in Australia in 2005, TomTom signed an agreement for Whereis to provide Australian mapping data to TomTom, marking TomTom's entry into the Australian portable car navigation market.

Since that TomTom/Sensis agreement, Navteq entered the Australian market in 2007, after 2 years of mapping Australian roads. This resulted in speculation around whether TomTom would switch to Navteq data in Australia. Fortunately for Sensis, in Europe, in May 2007, Navteq lost a contract to supply European mapping data for all TomTom devices, therefore for the time being, it looks like TomTom will remain with Sensis

For now Sensis still has its stronghold on the in-car navigation mapping data market in Australia, but as the NZ/ TomTom deal shows, locally it would only take a relatively small mapping data provider like Geosmart to result in some large changes in the local GPS industry. Nokia-backed Navteq will no doubt strengthen its presence locally too, resulting in more competition in the marketplace.

Action Plan for Sensis

Sensis is definitely aware of the stiff competition it is facing from Google and new players like TrueLocal, dLook, and others. They are making many changes and as mentioned previously they are currently going through this massive transformation process to be prepared for new challenges.After exploring thoroughly and analysing the local landscape this is my recommended action plan for Sensis to follow and become a leader in its offering rather than a follower.

1. Redesign Sensis and other Portals and Keep It Simple(KISS)

As highlighted previously, user interface (UI) experience at most individual sites (except homeatyellow) is not great because too many things are being tried on one page.

Sensis main page or entry point for all the services needs a redesign, even though it is less cluttered, but its top bar and center page needs bit of a thought. Please refer to my observations above under Simplicity

Another observation for the middle section of the main page. The middle section of the page has major service offerings listed in a tabbed fashion and first one is, All followed by Websites, News, Images, and 3 major services, Yellow, White Pages and Trading Post. I think adding tabs for Websites, News and Images first of all is not a good idea, (I use Google and so is the case with others more or less) and secondly it is not the strongest proposition Sensis has. What Sensis has is these 4 strong propositions, Whereis, Yellow, White Pages and Trading Post. So they should be there first and then probably add a CitySearch tab. The rest is of no value, at least to me.

My recommendation is that Sensis needs to hire a User Interface(UI) designing team. UI experience is the most vital part of online service offerings. It has a make or a break effect. Sensis should try to get the best people in the business, perhaps the guys who worked in the APPLE online UI team. That investment might be costly, but the quality and returns would be enormous.

Martin Fowler (CTO at Thoughtworks) has written a post why PeopleMatterMost. Read it here. His point is to hire people who are bright and the best in their business. It will cost more, but the value they bring in will help the business enormously in both the shorter and longer run. This is exactly what Sensis need for its UI team.

2. Re Brand it

It's better to re brand the Sensis portal as Australia’s Directory, eCommerce and Map Portal or other suitable slogan, instead of currently branded as The search engine for Australians. I don’t know how many people use Sensis to search for news, images or other info, but if there are few who use it, then they will sooner or later move to Google for their day to day search.This is because Google has become a social habit across the globe for people who are looking for information on the net, and when anything becomes a habit as part of your day to day life then no branding or window dressing can stop that phenomenon.In addition to that, to make life worse for Sensis, Google and Yahoo have made entry for new players in search nearly impossible because the amount of money required producing results accurately and efficiently is enormous. Yahoo itself is finding it hard to compete with Google. Sensis doesn’t have deep pockets like Yahoo, Google or Microsoft, so it’s better not to go down that path at this stage and use the resources more effectively on their core business and its strengths

In my view it will be better for Sensis to re brand from “The search engine for Australians” to more real and appealing branding.

3. Personalised Home - Create MySensis

Google gives users to have a personalized home page known as iGoogle, where they can addvarious applications like email, news feeds, weather, alerts and calendar and so on via widgets. It was published recently in a report from comScore, that iGoogle had the highest growth in all the Google sites, read it here

Moving forward Sensis should think of personalising the content, because it will be more useful especially when mobile devices are heavily used for search. Any business (or a person having a business listed or account with Telstra) should be able to get this page and then they can keep adding various services via the widgets. One of the useful widgets will be to able to see your mobile phone bill updated every 24 hrs or a tag cloud of the most searched categories by other people and so on.

Homeatyellow site has started offerings on these lines. For example, tags are visible for popular search items on Yellow and customisation is available. This is exactly what is needed, but it would be better to offer this at the Sensis main page combining with others services instead of just Yellow. Having said that, credit should go to the guys, as this is a step in the right direction.

Other option to consider is to provide the widgets for various services to iGoogle, to reduce the duplicity of content and managing various sites, this is becoming a major issue right now.

Problem here for Sensis, in the 80-20 rule of this tail, is that combining 80% of services is not producing more revenue than the 20% of the tail in the beginning, which comprises mainly Yellow, White Pages, Trading Post and probably Whereis. In my view Sensis needs to find a better way of selling and monetising the rest of the services to get the real effect of diversification and The Long Tail. This is also a major headache for other players.

4. Become a Leader in Mobile Offerings

More and more people have started using mobile devices and this is on rise. So the obvious next market place will be mobile based services. This is an area where Sensis should be putting more resources, because Sensis is doing a catch up job up in most areas. This area has a lot of potential in coming years and Sensis can become trendsetters rather than followers.Mobile is regarded as the next PC and why is that; well this can be explained by an example. In this digital age when we leave our house to go out, most people make sure that they are carrying 3 things, no matter where they have to go. These 3 things are:a house/car key, a wallet and a mobile device.Now think about it for a moment that a mobile device is with us all the time when we step out from home. When we are at home we are already connected to outer world, but when we go out we have a device, which can allow us to connect with others. This is where mobile device becomes a vital part in future.

Today’s mobile devices are not as advanced as today’s PC, but with iPhone and Blackberry and PDA’s, things are moving rapidly. Another example to support this, in a recent survey in Japan, young people were found having better typing skills on a mobile than a on a pc, which shows how times are changing. Mobile will be the obvious platform for consuming services and is the way to move forward.

Sensis has started offering Yellow and WhitePages on Mobile, but it's very basic. There is a lot of potential in this space and should start concentrating in this area as many other players like dLoook, TrueLocal, Google Maps already have mobile offerings.

5. Start Building Apps for iPhone

As alluded above Mobile offering will be the major market for any company engaged in online services. Apple’s iPhone is keenly awaited for its launch in Australia; it will be a wise investment to start offering the services on iPhone. Main reason to feel bullish about this is this. iPhone is a phenomenon/trend setter, it has become a craze in the mobile space across the globe just as Google has become a habit when looking for something on the net or an iPod when it comes to a mp3 player.

6. Make it available in GPS Unit (Car Navigation)

The new site for Whereis looks really great in its offering (not in UI), especially with its mash up of services. As part of this new mashup you can get information on nearby Hotels, nearby ANZ ATMs, nearby secure parking locations, rental properties and others useful information.

One of the other offerings locates the nearby, NAVMAN dealer (a New Zealand-based GPS systems company, that provides stand-alone GPS units). This suggests that NAVMAN have a business partnership with Sensis and might be using the Whereis map for its GPS units.

Sensis can further build this partnership and start offering business listings in these units. Partnering up with other vendors in this space has a lot of potential. Having said that, this might be happening, as this seems to be the natural course.

7.0 Make it Community Driven, Rich Media Enabled with Web2.0/Viral Social Network Features

Some of the areas that most local competitors are working on to make their platform services more appealing are; using mashups, providing recommendation/user rating (Digg Model) and becoming more innovative. Other than this all players are still caught up in old style offerings for directory listing.

If Sensis has to prepare itself for the digital and web 2.0 based economy then it has to embrace 3 C’s - conversation, collaboration and community.To achieve this, major changes are required in its online offerings. Following are my recommendations.

7.1 Add Viral Linkedin/Amazon Style Features

Example, Linkedin’s free user can not see the details of people who browsed their profile, but to create more curiosity they do tell that x number of people saw your profile from y industry domain. When a user gets this information he/she is intrigued and eventually buys the premium service.

Amazon also has a great feature tempting buyers to buy more stuff. When a user buys a book on Amazon, it suggests that ‘x’ user also bought this ‘y’ book.

This viral nature of features should be available to a user while searching on Yellow, Trading Post and CitySearch.

7.2 Add Recommendation/Review Features

Linkedin has another interesting feature, where people can post questions, and receive replies to their queries thus improving their public profile but they may also be contacted by others for new opportunities and expertise. Similarly Amazon has a review for its products, where consumers write the reviews to benefit other consumers and helps them in making an opinion. This is a great feature.

Sensis needs to add this review/recommendation feature for it's listings and allow the community to participate and let them decide which is a good choice for them. From a user point of view they get a more open and honest view of the business and ensures that business remain on their toes.

7.3 Add a Tag/Category Cloud

One of the most popular features with the new search based sites is to be able to look at the Tag cloud of searched items. This is a great way of finding the most popular things searched; del.icio.us (yahoo’s site) is a great example of this feature.

This feature is now available at homeatyellow site, but it needs to be extended to other areas.

7.4 Add Multimedia (video Profile) Based Profiles

Recent developments at Seek suggest that they are embracing rich media content. Some of the employers have started adding video (youtube embedded videos) when advertising for a job. This is a great way of advertising, promoting a brand and sending message across others. This is a paradigm shift in the jobs listing market. Seek is probably the first one to follow this in Australia. TV/Video is one of the most powerful mediums in the history of mankind.Example: Check this video offering from Superpages (For US only).

Sensis should embrace this, for example if each premium listed business on Yellow is allowed to add a 1 min video about their listing it will have a drastic effect on their business. Online platforms in the future are going to be based on rich multimedia capabilities. Right now our broadband infrastructure is not in a good shape compared to South Korean and Japan, but once the high sped broadband is rolled out this (video based profile) will become the most obvious feature needed for a business.

Future trends suggest rich media driven ads will become a defacto in online space. So to move in this direction first allow embedding from video sharing sites like Youtube on listed profiles under Trading Post, Yellow and White Pages and other services.

Sensis has a new offering in advertising space - MediaSmart (like Google’s Adwords/Adsense).The next step will be providing more services via MediaSmart to produce rich media enable profiles. This can be achieved easily because Sensis can partner with other vendors in that segment to integrate with the portal. All the vendors are moving to SAAS (made famous by Salesforce and Amazon) or have SAAS capability and it will be easy to achieve this capability.Sensis revealed they are about to add the facility to embed video advertising, in the concluded conference on Friday, April 11, 2000 at SMX Sydney. That's a welcome move!

7.5 Enter into Virtual World (Second Life)

One of the other opportunities, in online search and directory listing, is to explore and expand into the virtual world. Second Life is a leading virtual world community and more are cropping up day by day. Business like SUN, IBM has a presence in Second Life, even Telstra and ABC (media/broadcasting organization Australia) have a presence in second Life.Second Life has become a massive platform and is running a parallel economy; more and more offerings will be available in future. It will be a good place for Sensis to have a virtual CitySearch, business listings and other services in Second Life. It can also be used as a test bed for services, brand promotion and marketing exercise

8. Add intensive Data Reporting (Google Analytics or Data Mining)

Once the above mentioned features are available, one vital thing that is needed is, is intensive reporting back to the business. This is becoming one of the holy grail of the business problems. People/businesses want to know how their profile is being viewed, accessed, how the ad campaign is going, how many impressions they received, where is the bulk of traffic is coming from, and more revealing aspects like that. Media Smart does provide some of these features but it will have to add more features especially for video based listing campaigns when it comes on board. This data has a lot of intelligence about business (BI) and if reported and presented well to the business in layman’s terms then it is a good revenue generation exercise. This same data has a lot of value for research organisations. Google captures it, studies and thrives on it.

Another area, which is where lot of attention is going now, is Mobile Analytics. I’m not sure if Media Smart provide statistics for Mobile services, if not then this is the other area where Sensis should start working seriously, before it becomes too late. The best way to get into this space is to acquire a business in its early startup.

9. Cut Down Printing, Be Environment FriendlyNo matter what people say (especially the newer generation), there is definitely a market for printed directory and classified ads, even though this business is diminishing it still has enough business in it. Dave Swanson (also CEO of R.H. Donnelley) describes it in one line here, Online and Print usage is binary and has to exist side by side.

His observation makes sense, but the problem with Sensis, is the growth factor in print, especially in Yellow, which is 0.2% growth, compared to a 2.5% decline in 1H07. In White Pages it was more encouraging which included 9.9% growth in print compared to 8.1% growth in 1H07. Detailed financial results are discussed above.

In order to understand more about print usage of Yellow and White Pages, I recently did a small survey of a few properties in 3 suburbs to gauge how the print copies are used. What came out of that was not surprising. In 2 to 4 houses out of 10, Yellow and White Pages are used for a totally different purpose, like increasing the height of a PC, shoe rack, lying in front of an apartment or piling up in garage and so on. This trend is more prevalent with the young generation; many of its copies are wasted every year. Taking a holistic approach, my view is, if printing targets are cut by 20 to 30% it will reduce lot of waste in printing and will help environment not only from consuming less paper but, will reduce transporting costs and carbon emissions (diesel/petrol consumption).

To make it more appealing to customers Sensis should try using recycled paper and encourage them to send it back (if they are not using it) by giving incentives via Telstra’s phone account, just like Single Online Bill of Telstra.

10. Technology Stack and Practices

A company operating in online services market has a business model dependent purely on generating revenue from these service offerings. For a company to be in a healthy shape there are few vital things; good relationship with customers, happy employees, open work culture and a good investment in infrastructure. Sensis services are mostly IT driven. Therefore it’s vital for Sensis to make sure that their infrastructure is world-class, processes are agile and they are investing in their people/employees.

10.1 Implement and Realize SOA

As far technology is considered, some aspects of it are already covered above under Technology subsection. Sensis needs to look towards future and start integrating applications and services under SOA. Implementing and realising SOA in a heterogeneous environment with JEE, .NET, ROR and LAMP stack is a daunting task, but this is the way to move forward.(Note: SOA stands for Service Oriented Architecture)

10.2 Adopt Agile

To market your services at a faster rate and to adapt to market forces, Agile based software development methodology is the best way to move forward. As mentioned previously Banking/Finance/Online/Media are the natural candidates for the Agile (people are preferred over process).

10.3 Implement TOGAF

As far as technical and enterprise architecture is concerned it will be wise to adopt The Open Group Architecture Framework (TOGAF), in laymen terms it's an Iterative/Agile way of designing, preparing and validating solutions and roadmaps for the future.

10.4 Virtualize

Another thing to consider while moving forward, especially when lot of impetus is on saving energy and being environment friendly, is Virtualization. This will be an obvious choice, especially for consolidating applications and platforms. We all know in a big organisation like Telstra or Sensis, there will be a lot of legacy systems, or less demand intensive systems, which can be virtualized. This not only will save massive electricity costs, infrastructure maintenance and licensing costs, but will help them in managing the systems more efficiently. There will be many places in Sensis where this might be required.Example: All testing machines except staging environment and production environment can be virtualized.

10.5 Don’t Be Shy - Embrace Open Source

Gone are the days when open source solutions were a no go zone on CTO’s radar. Nowadays it is the open source community - which is driving the innovation and better products and services in IT. Open Source solutions are now part of most of the solutions being proposed in a heterogeneous and a large organisation. Sensis is already using a lot of open source tools and products. Moving forward wherever it makes a good case embrace them, this will also help in reducing the licensing and support costs.

I would like to thank Mark Rimmer from Rave About It and Meg Tsiamis from dLook for providing lot of invaluable information, insights and help while preparing this report. It took more than 3 weeks to put together this. Hopefully this will help everyone and especially Sensis. Sensis is definitely getting ready for the challenges ahead and they can pass it with flying colors

Next report will be on how other players can prepare themselves for the future.

10 comments:

Anonymous
said...

For a directory site with a difference check out www.boozewatch.com.au It is for WA only but they will email you their prices twice a week for drinks on special in your area. Saves me heeps more than fuelwatch.com.au

Thanks for your warm words Neerav. This is definitely has taken a lot of time to write something like this. It took more than 6 weeks to do this. Mark and Meg were really great in helping and providing necessray info.